In 2019, the PUMA Group (hereinafter PUMA) continued on its path to become the fastest sports brand in the world, by further strengthening its sports performance positioning. PUMA entered into many new partnerships with internationally renowned football clubs and the brand increased its visibility at key sports events globally through the numerous victories of our sponsored athletes and teams.
Our brand ambassadors Selena Gomez and Cara Delevingne created new Sportstyle collections that made waves on the catwalks and in the streets. We also opened our flagship store in New York City and even entered the virtual world of esports. All of this strengthened the PUMA brand and helped us live up to our vision of being “Forever Faster”.
In our sports performance business, the year started with a bang, as we announced our partnership with Manchester City in February. This deal is PUMA’s largest ever, both in terms of scope and ambition. We were also excited to welcome Pep Guardiola, one of the most celebrated football managers in the world, as a brand ambassador.
In Spain, we signed a contract with Valencia CF, one of the most respected clubs in Spanish football. We also became the official match ball partner of Spanish football league LaLiga Santander and LaLiga 1|2|3. This means that all goals in one of Europe’s strongest professional football leagues are now scored with the PUMA LaLiga 1 football.
The Women’s World Cup in France was one of the highlights of the football year and firmly put women’s football in the spotlight. During this tournament, PUMA sponsored quarter finalist Italy and a total of 78 players. To highlight our commitment to the sport, PUMA launched the latest evolution of the PUMA ONE football boot as the „PUMA ONE Trailblazer“, exclusively worn by our leading female players. PUMA is now in the position to have a title-contending presence in all major football leagues and with the national teams of Egypt and Morocco joining the PUMA family in 2019, we now sponsor 12 federations.
Our PUMA teams were also successful in other team sports: Denmark took the title at the Handball World Championships in Denmark and Germany. New Zealand won the Women’s Netball World Championships and the Richmond Tigers were victorious in the AFL Grand Final in Australia. PUMA also played an important role in the Rugby World Cup, with Duane Vermeulen being voted Player of the Match in the final.
The World Athletics Championships in Doha were an important event for our track and field athletes. PUMA enjoyed a high level of visibility during the tournament by supporting a total of 115 athletes and 12 national federations. Norwegian hurdler Karsten Warholm successfully defended his title over 400m hurdles and was later voted European Male Athlete of the Year. During the tournament 22 medals were won by athletes wearing PUMA.
PUMA also welcomed new partners in Motorsport, where we signed a long-term contract with Porsche to become the exclusive technical partner for racing apparel and footwear. We launched a separate collaboration with Porsche Design to create premium lifestyle products inspired by motorsports, which aim at the higher end of the market.
Our Formula 1 teams Mercedes AMG Petronas, Scuderia Ferrari and Aston Martin Red Bull Racing once again dominated the Formula 1 season, where PUMA further expanded its leading presence by becoming the official trackside retail partner during F1 race weekends. Our brand ambassador Lewis Hamilton was crowned Formula 1 Champion for the sixth time.
Making sure we also support the female champions of tomorrow, PUMA partnered with W Series, the first racing competition for upcoming female talent in motorsport.
In our Golf category, we celebrated the 10-year anniversary with golf ambassador Rickie Fowler, one of the most vibrant ambassadors of the brand. Our latest addition to our roster of golf players, Gary Woodland, won the US Open in June.
Also in North America, PUMA’s first full NBA Basketball season - after our return to the sport in 2018 - saw Toronto Raptors shooting guard Danny Green become the first PUMA athlete to win the NBA Finals since Isiah Thomas in 1990. We launched our first basketball shoe, the CLYDE COURT, in several new colors as well as two additional performance basketball shoes, the UPROAR and the CLYDE HARDWOOD. Both products were highly visible on court throughout the NBA Season, the All-Star Game, the Playoffs and the NBA Finals.
Deriving straight from the basketball court, the lifestyle shoe RALPH SAMPSON was one of our most important footwear styles in 2019. In the “chunky”-shoe category, several new colorways and collaborations within the RS-X-franchise continued to resonate well with our customers. Sneakers with a bulkier appearance, often referred to as “chunky” or “dad” shoes, have been an important trend over the past two years. The CALI franchise, presented by PUMA’s ambassador Selena Gomez, was successful within the women’s lifestyle category.
Selena also launched her second collection with PUMA, but she was not the only women’s brand ambassador to get creative with personal collections in 2019: Cara Delevingne teamed up with PUMA and French luxury fashion house Balmain, while Adriana Lima presented a line of products reflecting her experience in fitness and boxing.
As esports is becoming increasingly relevant for our consumers, PUMA announced its first-ever partnership in virtual sports with esports team cloud9. We also created our first products to meet the needs of esports athletes and gamers, such as an active gaming seat and active gaming socks. Through these partnerships, we are positioning ourselves to benefit from the fast-growing gaming and esports markets. Keeping it high-tech, our first-ever smartwatch helps athletes train, stay motivated, track goals and connect with others while on the go.
On the operational side, we continued to invest in our distribution and logistical network as well as in organizational processes. We celebrated the topping out ceremony for our new multichannel distribution center in Geiselwind, Germany, which is expected to be operational in early 2021. In addition, PUMA North America announced the opening of a new distribution hub just outside of Indianapolis for 2020. In August, we opened our New York flagship store on Fifth Avenue, which provides a deeply immersive brand experience and marks another milestone for our company.
PUMA’s net sales increased in the financial year 2019 by 16.7% currency-adjusted. In the reporting currency, the Euro, this corresponds to an increase in sales of 18.4% from € 4,648 million in the previous year to € 5,502 million in 2019. The increase of our brand heat and the continued focus on the improvement of our product range significantly contributed to the sales growth. This was particularly a result of the consistent implementation of our "Forever Faster" corporate strategy. Furthermore, we once again demonstrated our ability to react quickly and flexibly to changes and trends in our market environment. Despite the increase in uncertainty in the economic environment, as a result of the trade conflict between the United States of America and China, and in connection with Brexit, PUMA was able to achieve strong sales growth in the financial year 2019. Therefore, the currency-adjusted sales growth of around 10% prospected in the previous Combined Management Report for 2019 and the forecast of a currency-adjusted sales growth of around 15%, that was adjusted upwards during the year, were exceeded. As a consequence, PUMA was able to exceed the € 5 billion sales mark for the first time in the history of the company.
In addition to the strong sales growth, the increased gross profit margin contributed significantly to the increase in profitability in the financial year 2019. PUMA's gross profit margin improved by 40 basis points from 48.4% in the previous year to 48.8% in 2019. The main drivers for the development of the gross profit margin were the product mix and the regional mix and a higher proportion of our own retail sales. A slightly positive currency effect also contributed to the improved gross profit margin.
Other operating income and expenses in total increased in 2019 by 17.8%. The increase was mainly driven by higher sales-related costs, including costs for logistics, and higher expenses for marketing and investments in our own retail stores. The slightly lower increase compared to sales reflects the achieved operating leverage and results in a decrease of our cost ratio from 41.5% in the previous year to 41.3% in 2019. The continued focus on strict control of other operating income and expenses also significantly contributed to our improved profitability in 2019.
The operating result (EBIT) increased in the past financial year by 30.5% from € 337.4 million to € 440.2 million and was therefore above the guidance from the beginning of 2019, which had originally forecast an operating result within a range of between € 395 million and € 415 million. We were also able to slightly exceed the guidance, as adjusted during the year, for an operating result within a range of between € 420 million and € 430 million. The improvement in profitability is overall the result of the strong sales growth in combination with an improved gross profit margin and a slight operating leverage. This is also reflected in the development of consolidated net earnings and earnings per share, which increased by 40.0% compared to the previous year. Consolidated net earnings increased from € 187.4 million in the previous year to € 262.4 million, and earnings per share increased accordingly from € 1.25 in the previous year to € 1.76. As a result, PUMA was able to fully achieve or even slightly exceed the financial targets of the previous financial year.
The strong business development enables the Management Board and the Supervisory Board to propose to the Annual General Meeting on May 7, 2020, a dividend payout of € 0.50 per share for the financial year 2019. This corresponds to a payout ratio of 28.5% of net earnings and means a dividend increase of 42.8% compared to the previous year. The dividend proposal is in accordance with PUMA's dividend policy, which foresees a payout ratio of 25% to 35% of consolidated net earnings. In the previous year, a dividend of € 0.35 per share was distributed (payout ratio previous year: 27.9%).
To make PUMA more attractive for retail investors and in order to further diversify its shareholder base, the Management Board decided in 2019 to exercise a stock split with a 1:10 ratio. The stock split was subsequently approved by the Annual General Meeting on April 18, 2019. The stock split was carried out on June 10, 2019. The shareholders received nine additional shares for every share held on this date. The market price per share was accordingly adjusted at a ratio of 1:10. The PUMA share price developed very well in 2019. At the end of the year, the share price was at € 68.35. Taking the stock split into account, this represents an increase of 60.1% compared to the previous year’s € 42.70. The market capitalization of the PUMA Group increased accordingly to around € 10.2 billion at year-end 2019 (previous year: € 6.4 billion).